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3-2019

Russia: Positions of Brewing Companies

The review contains an analysis of interim performance of brewers in the first half of 2019. There are rather dynamic changes behind a modest industry growth. Baltika is again experiencing a stage of volumes and market share slid due to competition with AB InBev Efes. Because of the price competition and presence expansion in the modern trade company #2. has come close to the leading position. At the same time sales of Heineken Russia have continued growing which makes the premium part of the portfolio heavier. The market premiumization trend had been also confirmed by import brands. MBC and Zavod Trekhsosenskiy have been the most successful among federal market players. The market share of independent regional brewers and Ochakovo have continued falling as they are being squeezed out by the market leaders at their competitive fields.

Ukrainian beer market 2019: companies and brands

In 2019 beer production and market have been still fluctuating about zero point. However, the past season was successful for brewers judging by the sales profitability. The price mix has improved due to rapid general market premiumization, as well as its particular aspect, the growth of import beer sales. By the season end AB InBev Efes improved its positions considerably. It turned out that consumers had not forgot Efes brands that had to leave the market, but started to recover rapidly. Against the stagnating market that meant sales decline of other companies, in the first place Carlsberg Group that most of all beneficiated from Efes exiting the market. PPB turned out to be stable to branding activity of its competitor and Obolon kept the same volumes and at the moment it is the absolute leader of the economy segment. The share growth of independent producers took place thanks to leading craft breweries, that so far do not have a big market weight, but they are rapidly gaining it.

Brewing industry in Kazakhstan 2019

During the first half of 2019, the majority of Kazakh brewers made their contribution into positive dynamics. Yet it was companies of the lower division, not the two transnational leaders that raised their production and sales. The shares of draft beer and aluminum can which is rapidly squeezing glass bottle out of the market, have been growing. The price segmentation has remained stable despite the substantial rise of retail prices and fluctuations of brand market shares, while the borders between segments have become blurred. The main events in the industry have been: the announced revision of the beer excise policy, launch of BeerKhan brand in the strong beer segment, and most important – purchasing assets of Shymkentbeer by Arasan.

India. Karnataka orders recovery of tax dues from UBL

Even as a consortium of banks led by State Bank of India (SBI) is struggling to recover loan dues amounting to Rs 9,091 crore from UB Group chairman Vijay Mallya, the Commercial Taxes Department of Karnataka has issued an order to recover tax dues amounting to several lakhs of rupees from Mallya-controlled United Breweries Limited (UBL).

The exact amount of entry tax that can be recovered from UBL is still being calculated by the department, according to which the company has not paid entry tax on movement of malted barley/barley malt into its brewery on the outskirts of Bengaluru. The firm has not paid entry tax dues from 2007 to 2009, sources told FE.

Vijay Mallya as the chairman of United Breweries holds 35.8% stake in the company (as on March 31, 2015), while Dutch brewer Heineken holds 42.4%. Mallya left India early this month as banks sought a court order to confiscate his passport and arrest him for not paying their dues.

The company instead contested the department’s claim in the Karnataka Appellate Tribunal and got a relief stating that malted barley is an agricultural produce and is not liable for any tax. Subsequently, the department had moved the High Court in 2011. The divisional bench of the Karnataka High Court, in its order in September 2015, upheld the department’s claim of levying entry tax on malted barley/barley malt under the provisions of Karnataka Tax on Entry of Goods Act, 1979.

“The notification (No. FD 11 CET 2002(1) dated March 30, 2002) provides for levy of entry tax in respect of raw materials and inputs, which are used in the manufacture of tobacco products and liquor. Hence, arecanut, tobacco and any other agricultural produce brought into the local area for the manufacture of liquor and tobacco products such as beer, cigarettes, cigar, gutka, churuts, zarda and quimam pan masala or any other products which can be classified as liquor or tobacco products are liable for entry tax,” a circular issued by Commissioner of Commercial Taxes said.

In the circular issued recently, Ritvik Pandey, Commissioner of Commercial Taxes has instructed the department officials to impose 1% entry tax on raw materials brought into the local area for manufacture of liquor by the company.

Despite repeated attempts, the management of UBL was not available for a comment.

“All the assessments/re-assessments concluded by the assessing authorities allowing exemptions as agricultural or horticultural produce are to be reopened and reassessed in the light of the order of the division bench of the High Court of Karnataka under the provisions of the Act,” Pandey said in his circular.

The commissioner has also instructed the department officials to take up all the cases of the respondents (United Breweries) for the previous years wherever exemptions are allowed for reassessment on priority and levy the penalty and interest as existed at that point of time for the relevant years of assessment or reassessment.

The enforcement authorities have been directed to take immediate action to cull out information and take up inspection and conclude the proceedings as early as possible and send the reports to the concerned offices to take up assessment proceedings against the company.

“Even though barley is an agricultural produce, it is liable for levy of entry tax when used in the manufacture of liquor at the rate of 1% as per the notification issued by the government on March 30, 2002.

The department is right in ordering for the payment of tax arrears from the defaulting companies,” said B T Manohar, chairman, state taxes committee, Federation of Karnataka Chambers of Commerce and Industry (FKCCI).

24 Мар. 2016

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